The average rate on a 30-year fixed mortgage plunged to a new record low this week, averaging 2.72 percent according to Freddie Mac. That’s down more than a tenth of a percentage point from last week, when it averaged 2.84 percent.
With the U.S. economy in recession because of the coronavirus pandemic, mortgage rates have plunged. The 15-year fixed mortgage rate also hit a new record, dipping below 2.30 percent on average for the first time.
In a separate survey of rates by Bankrate, the average 30-year rate also fell, tying its record 3.03 percent in those metrics. The gap with Freddie Mac’s number is because Bankrate’s figure includes points and origination fees averaging 0.32 percent, while Freddie’s number excludes those costs. Freddie Mac said its average is accompanied by an average of 0.8 of a point.
“Weaker consumer spending data, which accounts for the majority of economic growth, drove mortgage rates to a new record low,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “While economic growth remains unstable, strong housing demand continues to have a domino effect on many other segments of the economy.”
Where do we go from here?
In the weeks and months ahead, the mortgage market may show some fluctuation, but these record-low rates aren’t going to last forever. Most industry watchers said between the election results and vaccine news, rates are likely to start a slow march upward, especially after a new administration is installed and the pandemic starts to subside.
While mortgage experts polled by Bankrate this week were mixed about what’s going to happen in the near term, the general sentiment is that rates are due to climb in the months ahead.
“Next week, a holiday-shortened week will likely bring a lot of volatility to rates on a day-to-day basis, but just like we have seen since the beginning of July, rates have remained pretty consistent,” said James Sahnger, a mortgage planner at C2 Financial Corporation in Jupiter, Florida. “If you are still contemplating refinancing, now is not the time to wait as I don’t expect to see these rates continue much into 2021.”